Social Security COLA 2024: What to Expect Next Year.The Social Security Administration (SSA) periodically implements a cost of living adjustment (COLA) to enhance the financial support it provides to beneficiaries. This adjustment ensures that recipients’ purchasing power remains intact. This article delves into when the COLA for 2024 will be announced and how the adjustment amount is determined.
About Cost of Living Adjustment (COLA)
Each year, the SSA reveals the upcoming COLA, which bolsters monthly payments to account for changes in the cost of living. This measure is particularly significant for retired individuals, surviving family members, and those who receive disability benefits. Notably, this adjustment encompasses various categories, such as children, spouses, widows, widowers, and parents of deceased pensioners.
Inclusive Coverage of the COLA
The COLA extends its influence over multiple dimensions of Social Security, including disability benefits like the Supplemental Security Income (SSI) program and Social Security Disability Insurance (SSDI).
Calculation of the COLA
The COLA isn’t a fixed sum; it’s intricately calculated based on fluctuations in the Consumer Price Index for Salaried Workers in Urban Areas and Clerical Workers (CPI-W). This computation spans from the third quarter of the preceding year through the third quarter of the current year—namely, July, August, and September. During this period, inflation is meticulously tallied, averaged, and then juxtaposed with the average from the previous year’s third quarter. The percentage disparity between the two averages determines the exact COLA amount.
The COLA Trend
Illustratively, the 8.7% variance between the CPI-W of 2021 and 2022 led to an 8.7% rise in Social Security payments in 2023. This example underscores the connection between CPI-W fluctuations and subsequent adjustments.
Anticipating the 2024 COLA Amount
As we approach 2024, the focal question emerges: How much will individuals receive as part of the COLA? In October, once the comprehensive CPI-W data for the year is amassed, the SSA will officially declare the COLA for 2024. This newly calculated adjustment will be instituted in December and implemented in the form of elevated payments starting in January of the ensuing year.
Projected Increase for 2024
While the precise COLA percentage for 2024 remains undisclosed, projections provide an initial estimation. Recent projections, informed by the Consumer Price Index report for July, suggest that the COLA for 2024 could amount to 3%.
Potential Impact on Payments
Considering this projected 3% COLA, it’s possible to anticipate the potential influence on monthly payments. The current average monthly payment for retired workers stands at $1,827. With the projected increase, this average could ascend to approximately $1,882. A similar calculation reveals that the average SSI payment, currently around $556, might rise to an average of $572—a 3% elevation.
The COLA stands as a dynamic component of Social Security benefits, ensuring the financial well-being of beneficiaries is not eroded by inflation. The anticipation of the 2024 COLA underscores the interplay between economic data, projections, and the ultimate augmentation of individuals’ monthly payments.